Modern Marketing
Gaming companies are using crypto to attract new customers
- Incentives for customers to adopt digital payments are more about marketing than meaningfully driving adoption
- Without a compelling reason, customers are unlikely to change their payment behavior
Getting customers to change their payment behavior can be an uphill climb for payment providers. Gamification, or the use of games and incentives can be a way to get customers to adopt digital payments.
India's Paytm was an early adopter of this technique, offering customers cashback incentives to get on the digital payment platform, for example.
And now it's coming to crypto. This week, Monetizr, a rewards engine used by online games, integrated Coinbase Commerce into its platform to let gamers buy game-branded merchandise with cryptocurrency. But since in-app payment behaviors within gaming platforms won't necessarily translate elsewhere, adding crypto payments is more of a novelty -- a marketing tool to draw in more customers.
"If you look at the demographic of gamers, it's a small ecosystem; they would have to take [crypto payments] out of that fold to to drive adoption," said David True, a partner at PayGility Advisors.
Cryptocurrencies, like all digital payment vehicles, face a steep adoption curve. They're not accepted by most everyday retailers, and friction -- particularly time and cost -- doesn't make it practical. Adding crypto is a novelty add-on that can draw in customers. In the case of Monetizr, gamers make in-app purchases using cards and that works just fine, according to the company. By adding crypto payments as an option, Monetizr is offering online game studios a powerful tool to attract more customers, particularly the gamer community fascinated with everything crypto.
Online game platforms that use Monetizr already offer users reward currency called MTZ tokens with which they can buy merchandise. Plans are underway to roll out a feature to convert MTZ to cryptocurrencies. But for now, adding Coinbase Commerce can get potential gamers excited about the ability to use crypto, even if it won't mean they'll be rushing to use it. Coinbase would not comment for this story.
"As a feature for game developers, it's huge," said Atlanta-based Monetizr founder and CEO Andris Merkulovs. "There are super loyal clients who would like to buy things with crypto; this is a marketing play to get more users, more downloads and more players."
Instead of a focus on driving up adoption numbers for crypto payments, the Coinbase add-on acclimates more users to the prospect of using them at some point in the future.
"Gamification in the traditional sense is a natural step to making cryptocurrencies more approachable with wider appeal and distribution," said Current CEO Stuart Sopp. "Value is often hard to sense until you actually can get something tangible in return."
Monetizr is targeting the gaming community because as a customer set, they're known to be enthusiastic about crypto payments. A February study of U.S. gamers by digital asset exchange WAX found that 55 percent of millennial gamers owned cryptocurrency, and two thirds of those surveyed wanted more opportunities to use cryptocurrencies within their video gaming network.
But despite their enthusiasm about using crypto to pay for in-app purchases, practical obstacles are unlikely to mean the feature itself will trigger widespread use on the platform, relegating it to a customer acquisition tool for online game studios.
"The real play here is for gamers to spend all this time, money and effort towards the games, and the value they get out of it is more emotional -- we're providing some incentives," said Merkulovs, who added that he still expects most in-app purchase revenue to be driven by credit cards or PayPal.